A group of U.S. senators this week asked the Federal Communications Commission to step in and examine whether exclusive relationships between wireless carriers and handset makers are in the best interest of customers.

Four members of the Commerce Subcommittee on Communications, Technology and the Internet fired off a letter to FCC chairman Michael Copps on Monday, expressing their growing concern over the deals, like the one in place between Apple and AT&T regarding the iPhone.

Their request actually stems from a petition filed last month by the Rural Cellular Association, a group of smaller tier II and tier III wireless carriers that provide service to parts of the U.S. where tier I brands like AT&T, Verizon, Sprint and T-Mobile do not.

They argue that their inability to provide their customers with some of the most popular mobile handsets and smartphones makes it difficult for them to compete, especially in markets where their coverage does overlap with some of the big tier I operators.

In their letter to the FCC, the senators asked the commission to examine five specific issues carefully and act expeditiously should they find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace.

Specifically, they request a determination on whether exclusivity agreements are becoming increasingly prevalent between dominant wireless carriers and handset manufacturers, and whether these agreements are restricting consumer choice, particularly for those living in rural America.

The senators also asked the commission to decide whether the agreements place limitations on a consumers ability to take full advantage of handset technologies, such as the ability to send multimedia messages (MMS) or the ability to "tether" a device to a computer for internet use.

This particular requests comes amid word that AT&T, despite the hefty service and data fees it charges iPhone customers, won't be able to provide iPhone 3G S customers with those two services from the onset of their new wireless contracts.

Among the other topics up for debate are whether the ability for a dominant carrier to reach an exclusive agreement with a handset manufacturer is inhibiting the ability of smaller, more regional carriers to compete; and whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace.

The letter -- signed by senators John Kerry (Dem. from Mass.), Roger Wicker (Rep. from Miss.), Amy Klobuchar (Dem. from Minn) and Byron Dorgan (Dem. from N.D.) -- precedes a hearing by the Senate Committee on Commerce, Science and Transportation on the matter set for Wednesday to help determine whether legislative action is necessary.

and whether exclusivity agreements play a role in encouraging or discouraging innovation within the handset marketplace.

Encourage, duh!
If they discouraged, do you really think they'd be Storms and Pre's, etc, in exclusive deals with their respective carriers? There wouldn't be competing App Stores (and I use that term "competing" loosely) if Apple's discouraged other carriers/manufacturers from innovation.

Exclusivity makes other carriers push for similar phones, and that makes manufacturers produce better phones in hopes of being the "competition"

when it comes to the Tier II companies, I'm sorry. Just wait, someone will buy you up, and you'll be nicely integrated with the same exclusive handsets... :-/

If AT&T can get away with illegally wiretapping its customers, I don't think it will have any problem with this one.

Look at the fall of rome...

if the people have bread and circuses, the few eleits are free to do whatever they like as no one pays attention. The iphone is showing clearly how the wireless companies are screwing everyone over, this is just a token gesture, they are going to say "shame on you, do not make it hard for folks to buy flashy trinkets to distract the public form our corruption"

OK, so I am a little cynical for the age of 24, I am fine with that...

You can't quantify how much I don't care -- Bob Kevoian of the Bob and Tom Show.

Even though the request sounds fair, are those smaller providers riding piggy back on the main networks that the big ones spent billions on to put in place during the last decade, or did they install their own towers etc.?

Even though the request sounds fair, are those smaller providers riding piggy back on the main networks that the big ones spent billions on to put in place during the last decade, or did they install their own towers etc.?

Some of those are fully owned subsidiaries of the network ops they use, they just market to the poor and high school kids with a little allowance money and unwillingness of parents to buy a contract cell.

Others are actually their own network, at one point there were dozens of carriers, the merge down to 4 is a really new trend, in the last 5 years or so. There still are a few that run their own networks, they also have 2 way roaming agreements with a big carrier

You can't quantify how much I don't care -- Bob Kevoian of the Bob and Tom Show.

Faux News reports that in a related development, GM is filing suit in Federal court to strike down Toyota's exclusive distribution agreement with its own dealers. "This exclusivity is clearly anti-competitive in nature," said a GM spokesperson familiar with the matter. "We view the ability to sell Toyotas at GM dealers as an essential step toward our corporate survival."

Take a look at this article why RIM is the king of market share in the US.

Quote:

International Data Corp's Mobile Phone Tracker data puts Research In Motion at more than half of the smartphone marketshare for the first quarter of 2009: that 55.3 percent share compared to a 19.5 percent share for Apple's iPhones. That's a dramatic surge from two quarters earlier, when BlackBerry devices hung on to 40.4 percent and Apple had 30.1 percent, according to IDC.

Looks like iPhone is losing market share, because it's a consumer oriented device most likely. In tough times people buy the device that's going to make them money, and in business that's the serious looking Blackberry.

Also another important thing:

Quote:

The key to BlackBerry dominance -- a recent survey by Yankee Group revealed that of 41 percent of Americans who planned to buy a smartphone for their next phone, half were planning on a BlackBerry -- is versatility. Sure, BlackBerry phones have reliable features and an entire app store, BlackBerry App World. But where iPhones and other flashy smartphones are often tethered to one wireless carrier in the United States -- iPhone is exclusively AT&T, for example -- all of the major carriers support at least one BlackBerry.

Pisses me off, Apple had a second chance to rule a market and they screw it up by ignoring the business market and catering only to consumers.

Completely left out of this article, and the even more important note brought up by this commity, was the fact of text message gouging. The want an enquirery on why service providers charge 20 cents per text when the service only costs them 1/3 of 1 cent to provide it...

Looks like iPhone is losing market share, because it's a consumer oriented device most likely. In tough times people buy the device that's going to make them money, and in business that's the serious looking Blackberry.

Or maybe it's because people are waiting for the new iphone to launch?

My prediction: iPhone will be over 50% for the third quarter, then back to upper 40% for the fourth, then down to 30ish% for the remaining quarters while people wait for the next new iphone.

If AT&T can get away with illegally wiretapping its customers, I don't think it will have any problem with this one.

First thing I thought of. John Kerry can go stick his Herman Munster head back in the sand. If AT&T sent him a check for a $100, he'd probably shut up. He is after all the king of rolling over for others, for almost no reason.

Where is the investigation into AT&T's data leaking to the US government? Oh, right, Kerry is part of an administration now, which benefits directly from all of that info collected under Bush.

But they need to stop AT&T having the iPhone because its just not fair! No fair no fair!

Ever notice that the senate will only deal with issues that affect the whiny, cry-baby, immature citizens of this country? Not REAL issues?

Completely left out of this article, and the even more important note brought up by this commity, was the fact of text message gouging. The want an enquirery on why service providers charge 20 cents per text when the service only costs them 1/3 of 1 cent to provide it...

Out effin' ragious!

The issue is that it's still not an essential service - Apple makes over 30% profit on everything they sell and this is much, much higher than their competition but nobody is going to take them to court for excessive profiteering because you are choosing the buy their product (oil's in trouble because you really don't have much of a choice even if their margins are less than 10%).

A group of U.S. senators this week asked the Federal Communications Commission to step in and examine whether exclusive relationships between wireless carriers and handset makers are in the best interest of customers.

Quote:

The letter -- signed by senators John Kerry (Dem. from Mass.), Roger Wicker (Rep. from Miss.), Amy Klobuchar (Dem. from Minn) and Byron Dorgan (Dem. from N.D.) -- precedes a hearing by the Senate Committee on Commerce, Science and Transportation on the matter set for Wednesday to help determine whether legislative action is necessary.

What a bunch of worthless bed-wetters.

"OOHH - Company A may not be able to compete with Company B because Company C worked closely on a difficult project with Company B! We're LAWMAKERS - We'll come to the RESCUE!!! (Provided an equitable donation is made to our 're-election / slush' fund, of course.)"

Bunch of worthless, Constitution-ignoring, corrupt bed-wetters. Same with their supporters.

You don't like the deal you're getting from a company, no problem - use the competition, or start-up a competing company. That's the American Way - it served our forefathers well to piss on the garbage in this article.

Faux News reports that in a related development, GM is filing suit in Federal court to strike down Toyota's exclusive distribution agreement with its own dealers. "This exclusivity is clearly anti-competitive in nature," said a GM spokesperson familiar with the matter. "We view the ability to sell Toyotas at GM dealers as an essential step toward our corporate survival."

It's not about where you BUY an item. Look at music. iTunes and Walmart each have their exclusives, but nobody really cares, because all Walmart CDs can be imported to into iTunes, and all iTunes songs can be burnt to CD.

Now in your example, if Toyota were selling cars that only ran on roads built by one specific construction company, then people would have reason to be upset.

The issue is that it's still not an essential service ... but nobody is going to take them to court for excessive profiteering because you are choosing the buy their product .

What the hell is the deal with taking ANYBODY to the government because they feel they made "too much money" over ANYTHING?!?

We used to have something in this country called Freedom. It's why people came from around the world - sometimes on the most poorly put together boats imaginable - risking their lives to end up on our shores.

Why in God's name are we smothering Freedom to death with busy-body, nimrod bureaucracy? Are we all - as a nation - on crack?

True, perhaps better discussed over a couple of beers in some casual pub (Then a friendly game of pool afterword).

Hmm, pool or darts - I'll take darts! Let's hope there aren't any Brits reading right now because I'm sure they'd beat the heck out of me. I did beat a Brit (a league cricket player) once when we agreed to play left handed tho! (I'm oddly ambidextrous so that probably helped )

Or maybe it's because people are waiting for the new iphone to launch?

My prediction: iPhone will be over 50% for the third quarter, then back to upper 40% for the fourth, then down to 30ish% for the remaining quarters while people wait for the next new iphone.

While one would expect iPhone demand to wane the further out we are from the previous release date and the closer we are to the next release date, I think there may be another rather accidental factor at play here. In the early part of 2009 there was a lot of buzz around President Obama's Blackberry and his desire to keep it, which resulted in a large amount of free publicity for RIM, and no doubt a lot of interest in Blackberries. This is something that is unlikely to be repeated, and seldom (or perhaps never) mentioned in connection with RIM's Q1 & Q2 sales numbers.

As far as this very welcome investigation into wireless carrier practices goes, I hope they will also be examining the issue of wireless network neutrality, in addition to other aforementioned practices that are anticompetitive and harmful to consumers.

What the hell is the deal with taking ANYBODY to the government because they feel they made "too much money" over ANYTHING?!?

We used to have something in this country called Freedom. It's why people came from around the world - sometimes on the most poorly put together boats imaginable - risking their lives to end up on our shores.

Why in God's name are we smothering Freedom to death with busy-body, nimrod bureaucracy? Are we all - as a nation - on crack?

I wasn't agreeing with the idea of them ruling on essential services, I'm just saying that even in the current political landscape it won't go anywhere because it's not an essential service.

Well, if the exclusivity is henceforth banned by the law, then I suspect that the customer price for the iPhone may increase. Even if the iPhone will be available with more carriers, it may certainly lead to an increase in the price point. This is more so possible, despite a 2-year contract with the carrier.

In that case, the killer could be the data plan charges, and full-fledged services like the tethering, and MMS support.

Well, if the exclusivity is henceforth banned by the law, then I suspect that the customer price for the iPhone may increase. Even if the iPhone will be available with more carriers, it may certainly lead to an increase in the price point. This is more so possible, despite a 2-year contract with the carrier.

In that case, the killer could be the data plan charges, and full-fledged services like the tethering, and MMS support.

I don't see any reason to expect this at all. If anything, availability from multiple carriers will lead to an increase in the subsidy and decreases in the rate plans, as carriers compete to provide the lowest entry point and TCO.

You're right. I'm tendering my resignation now and divorcing my wife. I must have an iPhone!

Haha

And you have the freedom to make that choice.

I think people who live in rural areas with no cell service should sue the government for allowing companies to skip areas where people live. Then the government can force the companies to build cell towers for those families.......then they can sue the company for being a monopoly in that area and charging unfair prices. Then the government steps in again and takes over the company.

You could also say that if there was no civilization at all. The very purpose of government is to force life to be as fair as it can be. That includes being fair to businesses as well as consumers, so the trick is neither over- nor under-regulating.

If the question is whether these exclusivity agreements benefit customers, the answer is obviously no. How could they? There's no reason why a consumer would choose to limit certain handsets to certain carriers.

I don't think Apple has any great love of AT&T. Apple wanted to sell a single iPhone model with worldwide compatibility. By being by far the largest GSM carrier in the US, AT&T got the iPhone almost by default. If Verizon was GSM, Verizon would have got it. To get it while being CDMA Verizon would have had to make it worth Apple's while to change their single-technology plan and they couldn't do that.

Wasn't one of the issues with the iPhone initially that Apple said it needed to test out visual voice-mail? So if a small company wants to use the iPhone, it would need GSM and have a system that supports visual voice-mail. At least, that's my understanding. Seems like a lot of extra set-up and potential upgrades that these small companies would need, and I'm not sure they could actually afford.

I wasn't agreeing with the idea of them ruling on essential services, I'm just saying that even in the current political landscape it won't go anywhere because it's not an essential service.

In the "current political landscape", take nothing for granted.

Let me go off-topic for a minute to show just how upside-down things are: Just a few weeks ago, pensioners who thought they were making safe investments with a car company (because their investment was backed by secured assets) got hosed over.

For young-uns out there that don't know what a "secured asset" is, let me give you an example. You want to buy your first car, or maybe your first home, but you don't have all the money right now? Simple - get a loan. The reason that people are willing to loan you money for something like that is that a) if all goes well and you pay it all off, they make a profit on the loan interest, and b) worst comes to worst and you can't pay off the loan, they have rights that will enable them to get their money back.

In this example they'd probably direct that the item be sold (and you get whatever excess money is made from the sale). In other situations, they might use their rights instead to force management changes at a company. In any event, they have rights - a "bundle of rights" - that were negotiated up front as terms of the loan.

That's what a "secured asset" is. This is the kind of thing that made the economy tick - people putting their money to work for them. They put their money at risk, but not TOO much risk. If the money was at too much risk, the money would be stuffed away in a mattress instead. You wouldn't be buying your first car, your first home, and companies wouldn't be making capital investments. It's those investments, by the way, that give shmucks like you, me, and the schmoe down the street a job.